Hydrelle designs and manufactures in its plant a turbine adapted to the characteristics of a specific dam; adapting it to another site would require a costly redesign, and reselling it as is would only be possible at a significant loss. If the customer terminates for reasons other than Hydrelle's failure to perform, the contract provides at all times for payment of the costs incurred plus a reasonable margin, a right confirmed by a legal opinion (case data). The turbine will remain in the plant until it is shipped. The CFO proposes recognising revenue on delivery, on the grounds that the customer does not hold the turbine during manufacture. Write a reasoned memo on the pattern of revenue recognition.
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